Daily Management Review

How Much Will FIFA lose without Sepp Blatter?


06/03/2015


So, Joseph 'Sepp' Blatter is going away. Many companies are concerned about corruption scandals that preceded his resignation after the election victory – after all, they put a lot of money into FIFA.



reuters
reuters
May 29 Blatter was re-elected to the presidency, but international hostility, apparently, became unbearable for him. At a hastily convened press conference on Tuesday (which is why there were only a dozen journalists in the room), 79-year-old Swiss has announced a voluntary resignation.

He will remain in his post until his successor is elected. This should happen at the extraordinary congress, the timing of which should be determined by the Executive Committee of FIFA. Most likely, it will take place between December 2015 and March 2016 This time will be enough to ensure that all potential candidates have announced their participation, spoke about their program and conducted the election campaign.

The head of the European football association UEFA, Michel Platini, who led the opposition to Blatter's re-election in the football world, is likely to become one of the main contenders for his place, despite the fact that he supported Qatar as the venue for the World Cup in 2022 - many people call the decision one of the most controversial of FIFA in recent years.

Jordan's Prince Ali Bin Al Hussein, who was Blatter's opponent in the elections last week, and the former Portuguese footballer Luis Figo are among other possible candidates, says the British magazine The Economist.

In his short speech, Blatter said about "deep thinking about his presidency," and that, having a mandate from the members of FIFA, he does not feel the presence of a mandate from the football world. He added that in the coming months, he "needs to focus on how to carry out fundamental reforms that will reflect our previous efforts."

Blatter announced a few ideas about the "deep structural change": reducing the size of the executive committee, election of its members on the FIFA Congress and the "integrity check" for all members of FIFA committee, not in the regional confederations. He would also like to introduce term limits for members of the committee and for the president.

Now, the main issue will be the actions of the main FIFA sponsors. The partners of FIFA includes companies that support the football organization through long-term contracts, such as Adidas, Coca-Cola, Visa, "Gazprom", and Hyundai / Kia Motors. They have the right to use the official symbols of FIFA in their advertising campaigns, both inside and outside stadiums, what protects against ambush marketing.

Each of the six main sponsors bring about $ 30 million a year.

There are second-tier sponsors, such as, for example, Budweiser and McDonald's, who pay for being involved in the World Cup campaign. In addition, there are companies that enter into agreements with national associations of football. Nike, for example, pays for the Brazilian national team to wear their T-shirts.

In late May, amid a corruption scandal, it was reported that Adidas, Coca-Cola, Budweiser and McDonald's took a wait on further contracts with FIFA and Visa exposed the organization's leadership to harsh criticism. In principle, this could lead to the fact that the companies abandon the new contracts. So did Emirates Airlines, Sony, Castrol, Continental Tire, and Johnson & Johnson in the past year, and the reason for this was precisely the suspicion of corruption.

Qualifying rounds and finals of the championship in 2014 brought $ 4.8 billion over four years. Considering the cost, FIFA profit amounted to over $ 2 billion.

This amount of revenue can be divided into five main sources:

Usually FIFA re-invests a large portion of its income, but also sends the funds to create a cash reserve, which is required as insurance to cover losses due to the possible cancellation of the World Cup.

The size of the reserves has grown in recent years. In 2005, it amounted to only $ 350 million, and last year the figure reached $ 1.5 billion.

The contracts cost a lot, but at the time, they themselves bring a good profit to the companies. Obviously, the future behavior of the sponsor organizations will be largely determined by pragmatic considerations. Large business will always look for an opportunity to make money, despite the possible reputational risks.

If Visa refues the partnership, then MasterCard, which has extensive experience of cooperation with UEFA, will take the stage.

Coca-Cola key competitor - Pepsi - is actively expanding its operations in sports advertising, snatching the individual platform at Coca-Cola. One can hardly imagine that the company voluntarily give up such a large advertising platform.

source: bbc.co.uk

 






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